Question

The account balances for the noncash current assets of Allen Company are as follows:


Net income for 2009 is $35,000. Depreciation expense is $22,000. Assume that all sales and all purchases are on account.

Required
A. Prepare the Operating Activities section of the statement of cash flows, using the indirect method. Explain why cash flow from operating activities is more or less than the net income for the period.
B. What additional information do you need to prepare the Operating Activities section of the statement of cash flows using the direct method?
C. Explain the usefulness of each method for managerial decisionmaking.


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  • CreatedMarch 11, 2015
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